The document analyzes efficiency ratios for non-life insurers in 13 countries from 2007-2010. It finds that: 1) Underwriting performance improved in many markets in 2010 as expenses declined as a percentage of premium revenues, though results varied by country. 2) Claims ratios declined in most countries as premium volumes grew and fewer natural disasters occurred, improving underwriting performance. 3) Operational ratios remained relatively stable in many countries, though were higher in countries like India, the UK, and US compared to others.

1. www.worldinsurancereport.com
WORLD
INSURANCE
REPORT
2012

3. 2012 World Insurance report
TABLE OF CONTENTS
CONTENTS
5
Preface
7
CHAPTER 1
Costs and Efficiencies Are the Critical Levers of Performance for Non-Life
Insurers Today
9
— Efficiency Model Shows Core Operations Are Critical
to Performance
11
— Insurers in Most Markets Share a Focus on Cost
and Operational Efficiencies
21
CHAPTER 2
Business Agility Survey Shows Investment in Several Policy
Administration (PA) Sub-Functions Is Paying Dividends
22
— PA and Underwriting Agility Hinges on Eight Key Performance Levers
24
— Proactive Investment Has Improved Agility in Core Back-Office PA Levers
24
— Survey Shows Agility in Different PA Sub-Levers Varied by Business Line,
Region, and Size
32
— Case Study: Leading Non-Life Insurer Uses Advanced Analytics
to Drive Agility in Rate and Quote and Premium Reminders/Renewals
35
CHAPTER 3
Policy Administration Is the Next Priority for Transformation
while Driving Results
37
— Policy Administration Transformation Is a High Priority for Many Insurers
37
— PA Transformation Potentially Offers Benefits to the Top and Bottom Lines
8
3
— Business Value Is Key to Decisions about PA Transformation Strategies
40
— Business Process Re-engineering, Consolidation, Modernization,
and Sourcing Are Core Elements of In-house PA Transformation
41
— Case Study: Leading Life Insurer Consolidates Firm-Wide Capabilities
with the Help of IT-Enabled PA
43
— Case Study: Global Life Assurance Company Converts Policies Cleanly
and Promptly in Far-Reaching Data Migration Effort
44
Methodology
46
About Us
3

4. 4

5. 2012 World Insurance report
Preface
Preface
Capgemini and Efma are pleased to present the fifth edition of the World Insurance Report (WIR). Insurance
companies around the globe are working hard to grow their businesses, despite today’s challenging environment,
in which costs are rising, and uncertainty persists about the financial contribution from investment income. The
WIR 2012 looks at how insurers are focusing their efforts on operational efficiency and effectiveness to protect and
grow margins, even when demand is slow to increase.
The report specifically offers insights into how leading institutions are refocusing their efforts to reduce both cost
per policy and total cost of ownership, and acting to improve the operational efficiency of their business processes.
The report builds on Capgemini’s use of a proprietary Business Agility Maturity Model (introduced in the
WIR 2011) to assess the functional maturity and leading practices of insurers across regions. This report also
investigates the cost drivers for insurance companies across regions, and the increasing focus among insurers on
transformation in the ‘Policy Administration and Underwriting’ Function.
The findings of the WIR 2012 draw on research insights from 19 markets: Australia, Austria, Belgium, Brazil,
Canada, Denmark, France, Germany, Hong Kong, India, Italy, Netherlands, Philippines, Singapore, Spain,
Switzerland, the U.K., the U.S., and Vietnam. Among these countries are 13 of the world’s top 20 insurance markets
in terms of premiums. Included in the research were in-depth focus interviews with 71 insurance executives.
We are pleased to present you with this year’s World Insurance Report, and hope our findings offer insight into
the challenges and opportunities now facing the global insurance industry.
Jean Lassignardie
Global Head of Sales and Marketing
Global Financial Services
Patrick Desmarès
Secretary General
Efma
Capgemini
5

6. 6

7. 2012 World Insurance report
CHAPTER 1
Costs and Efficiencies
Are the Critical Levers
of Performance for
Non-Life Insurers Today
CHAPTER 1
INTRODUCTION
Non-life insurers around the globe have been quick to respond to the effects of the global
financial and economic crisis witnessed in 2008 and 2009. Many turned their focus in 2010 to
the core drivers of underwriting performance, pursuing more cost-effective and efficient ways
to acquire business and manage expenses and claims.
The reality is that even though premium volumes are rising in some markets, few insurers are
in a competitive position to raise rates, few can expect any great contribution from investment
income in the near-term at least, and few expect any major decline in claims. Many non-life
insurers, and especially those in highly developed markets, also face a difficult task growing
the top line, because insurance penetration (premiums as a percentage of GDP) and density
(premiums per capita) are high, products are increasingly commoditized, and customers
focus heavily on price.
As a result, for non-life insurers to achieve sustained performance in coming years, they will
need to optimize client-acquisition and retention strategies, become more sophisticated in
pricing risk, increase the efficiency of claims management, and undertake transformative
initiatives in other key operational areas, such as policy administration (see Chapter 3).
These conclusions are based on our study of the non-life segments in thirteen countries:
Australia, Belgium, Brazil, Canada, France, Germany, India, Italy, Netherlands, Spain,
Switzerland, the U.K., and the U.S. These countries together account for approximately 72%1
of the global non-life insurance market.2 For these countries, we used an Efficiency Model to
calculate efficiency ratios (expense and profit metrics against gross written premiums (GWP))
for major players in each market, and to analyze broad industry performance trends by
market accordingly.3
1
Based on non-life premium volume for 2010 for the analyzed countries, and data from “World Insurance in 2010,”
Swiss Re Sigma Report, 2011
2
See Methodology
3
Since efficiency ratios depend on a variety of external factors, including general economic conditions,
government regulation, business type, consumer preferences, etc., it is rarely relevant to compare ratios
directly across regions. It is more germane to compare trends over time within regions, and perhaps within
business types or insurance segments
7

8. Figure 1.1 Non-Life Insurance Expenses as a Percentage of GWP in Select Countries (%), 2007-2010
FIGURE 1.1.
Non-Life Insurance Expenses as a Percentage of GWP(%), 2007-2010
Underwriting Ratio PP Change
2009-2010
Australia
07
08
09
10
61.1
69.1
77.4
70.5
Belgium
07
08
09
10
62.7
62.5
65.0
64.0
Brazil
07
08
09
10
64.0
65.5
64.5
62.1
Canada
07
08
09
10
France
07
08
09
10
Germany
07
08
09
10
India
07
08
09
10
9.4
9.0
9.7
10.3
15.7
15.7
15.1
15.7
12.6
12.5
13.1
14.5
68.0
72.4
74.0
73.8
7.9
8.2
70.8
68.2
67.1
70.5
(7.1)
87.8
87.2
89.8
90.0
14.6
14.0
16.6
15.3
10.6
10.9
10.6
10.9
70.1
70.8
77.6
77.0
0.2
91.2
91.9
94.3
91.9
(2.4)
16.9
95.4
16.8
100.2
16.7
101.3
17.3
102.0
0.7
14.9
92.9
14.7
93.7
8.2
15.1
100.9
7.2
15.9
100.1
12.8
12.9
13.3
13.2
(0.8)
10.8
94.4
11.1
92.2
11.5
91.9
12.2
95.9
87.2
88.7
86.8
4.0
29.1
29.0
30.3
6.9 123.2
7.3 125.0
6.3 123.3
NA
NA
69.3
73.5
79.0
74.7
Italy
07
08
09
10
Netherlands
07
08
09
10
Spain
07
08
09
10
Switzerland
07
08
09
10
07
08
09
10
66.3
67.8
73.6
66.2
07
08
09
10
66.3
68.6
67.7
69.1
16.0
93.7
16.0
98.0
8.6
16.1
103.7
8.4
16.0
99.1
(4.6)
11.9
5.8 103.9
11.0
5.2 101.9
9.4
6.2 102.0
6.1 6.1 99.2
69.8
69.5
69.5
69.0
U.K.
8.4
63.8
67.2
68.3
65.7
U.S.
85.0
13.1
94.5
14.4
10.9
102.0
14.0
10.6
94.9
13.1
11.3
10.7
(2.8)
8.4
86.2
85.7
86.4
87.0
0
25
6.6
13.3
8.2
8.2
8.2
83.8
13.3
88.8
14.0
90.5
15.0
88.9
(1.6)
15.0
15.3
16.6
16.3
(1.2)
9.4
9.3
9.7
9.4
15.4
19.2
94.2
94.1
95.9
94.7
16.0
(7.2)
18.7
97.7
17.4
104.4
14.8
107.1
15.0
99.9
18.1
20.1
19.7
18.9
17.1
17.5
18.2
17.9
0.2
18.7
50
75
101.5
106.1
105.6
105.8
100
125
Underwriting Ratio (%)
Claims Ratio
Operational Ratio
Acquisition Ratio
Note: The ratios are valid only for non-life insurance. The ratios reflect non-life data as reported by the countries themselves, and hence include health insurance for
Belgium, India, Italy, Spain, Switzerland, and the Netherlands. At the time of analysis, no 2010 data was available for India, where the financial year ends March 31st.
Ratios for prior years may have changed from those previously reported due to the restatement of results by some companies. PP refers to percentage points
Source: Capgemini analysis, 2011
8

9. 2012 World Insurance report
Efficiency Model Shows Core Operations
Are Critical to Performance
–– decline in the claims ratio (total claims and
A
benefits disbursed/GWP) was the primary driver
of better underwriting performance in Italy, Spain,
and the U.K., as well as in Australia and Brazil,
where the acquisition ratio (total commission and
fees paid/GWP) also declined tangibly.
–– he underwriting ratio rose, however, in Belgium,
T
Canada, Germany, and the U.S., due to higher
claims and/or operational ratios (total operating
expenses/GWP).
–– he underwriting ratio in India remained the
T
highest across all the countries analyzed, as the
industry there experienced both a high claims
ratio and a high operational ratio.
Since profit margins declined in 2008 due to the
effects of the global financial crisis, non-life insurers
across the globe have been trying to reduce expenses
across claims, operations, and distribution. There
was an increased focus on underwriting performance
in 2010, and an improvement was witnessed in
many markets.
While many insurers have already enhanced
operational ratios, their success varies enormously,
especially given the distinct conditions in each market
(detailed by country later in this chapter). However,
the following general trends were evident from our
analysis of non-life performance in 2010:4
ƒƒUnderwriting performance improved in many
countries in 2010, with declines in the underwriting
ratio (claims ratio + acquisition ratio + operational
ratio) showing that a smaller percentage of premium
revenues was spent in claims and expenses in 2010
than in 2009 (see Figure 1.1).
CHAPTER 1
ƒƒThe claims ratio declined in 2010 in most
analyzed countries (see Figure 1.2) as premium
volumes grew, and fewer natural disasters occurred
overall. These dynamics produced an especially
strong improvement in the claims ratio in the U.K.
70.8
68.2
67.1
70.5
70.1
70.8
77.6
77.0
68.0
72.4
74.0
73.8
77.4
70.5
61.1
69.1
Claims Ratio (%)
80
(4.3)
87.2
88.7
86.8
100
NA
0.6
(0.5)
(7.4)
1.4
66.3
68.6
67.7
69.1
3.4
66.3
67.8
73.6
66.2
Brazil
(0.6)
69.8
69.5
69.5
69.0
Belgium
(0.2)
63.8
67.2
68.3
65.7
(2.4)
(2.6)
Spain
Switzerland
U.K.
U.S.
86.2
85.7
86.4
87.0
(1.0)
69.3
73.5
79.0
74.7
(6.9)
64.0
65.5
64.5
62.1
PP Change
2009-2010
62.7
62.5
65.0
64.0
Figure 1.2 Claims Ratio for Non-Life Insurance inin Select Countries (%), 2007-2010
FIGURE 1.2. Claims Ratio for Non-Life Insurance Select Countries (%), 2007-2010
60
40
NA
20
0
Australia
Canada
France
Germany
2007
India
2008
Italy
2009
Netherlands
2010
Note: The ratios are valid only for non-life insurance. The ratios reflect non-life data as reported by the countries themselves, and hence include health insurance for
Belgium, India, Italy, Spain, Switzerland, and the Netherlands. At the time of analysis, no 2010 data was available for India, where the financial year ends March 31st.
Ratios for prior years may have changed from those previously reported due to the restatement of results by some companies. PP refers to percentage points
Source: Capgemini analysis, 2011
Data for India refers to fiscal 2009, which ended March 31st, 2010
4
9

10. Still, claims ratios continued to reflect countryspecific conditions, including the prevalence of
catastrophic events, variations in premiums written,
and changing regulations.
–– he claims ratios of India and the Netherlands
T
remained the highest among the analyzed
countries. Dutch insurers continued to shoulder
increased health-insurance claims after a
new insurance act was introduced in 2006.
The industry in India suffered from both
inefficient underwriting practices and strong
price competition.
–– he claims ratio for the U.S. non-life insurance
T
industry deteriorated in 2010, due to a significant
rise in catastrophe-related expenses, and the
continued weak underwriting performance of
commercial insurance.
–– he German non-life industry also had a higher
T
claims ratio in 2010, as natural calamities and
adverse weather conditions boosted claims
expenditures across auto and property
business lines.
ƒƒThe operational ratio remained relatively stable
in many countries, but the ratio was higher in
India, the U.K., and U.S. than in other countries
analyzed. The operational ratio of India’s non-life
industry remained the highest of all the countries
analyzed, as both new and existing players have
spent heavily to scale up their operations and/
or capabilities. Brazil has also seen a rise in
its operational ratio due to the scaling-up of
operations, but major players there are expected to
benefit from economies of scale after consolidation
activity in the past few years. By contrast, the
Dutch ratio dropped significantly in 2010, as
insurers looked to become more efficient in a highly
competitive environment. The ratio also remained
low in France, as large players captured cost savings
from initiatives undertaken in prior years.
ƒƒA range of alternative distribution channels
has emerged in recent years and investment in
technology has increased as insurers seek to generate
cost efficiencies from their distribution networks. In
some markets, this has helped to contain acquisition
ratios, but the cost of acquiring new business
remains high, especially when new business is
generated by commission-based channels. In France
and Spain, for instance, the acquisition ratio has
10
increased, because agents and brokers remain the
major distributors for non-life insurance products. The
same dynamic is evident in German auto insurance.
Still, non-life insurers across the globe are likely to
continue experimenting with a range of alternative
channels to generate growth and reduce expenses.
––Brazil has witnessed an innovative example of
alternative distribution, for example. Intermediaries
are entrenched in the non-life insurance market
there, but insurers have started to leverage the reach
of widespread outlets, such as garages, petrol
stations, pharmacies, department stores,
supermarkets, and utility companies, to provide
affordable and accessible insurance for the lowerincome population of the country.
ƒƒInvestment incomes remain lower than before the
global financial crisis of 2008 in most markets.
In 2010, the returns on non-life insurers’ investment
assets generally extended the recovery begun in
2009, but income is still lower in almost all markets
than in the pre-crisis years. The Indian non-life
industry continued to have one of the highest
investment ratios globally as a result of significant
exposure to rising equity markets, and prevailing
high interest rates in the country. In general, though,
the contribution of investment income to insurers’
profitability is likely to remain far more limited than
in the pre-crisis, because most insurers have adopted
more conservative allocations (e.g., reduced exposure
to volatile equity markets), either by choice or to
comply with systemic risk and solvency regulations.
Investment income could also suffer further if the
global economy keeps slowing.
ƒƒThe profit margins for non-life insurers improved
globally in 2010, in line with rebounding investment
returns, but they nevertheless remained sharply below
pre-crisis highs (witnessed before 2008) in most
markets. Many insurers also bolstered profits in 2010
by improving underwriting performance, though the
U.S. managed to improve its profit margin despite a
rising underwriting ratio. The profit margin declined
tangibly in Germany, Italy, and Spain: In Germany,
higher claims expenses wiped out profits; in Italy,
regulation has especially driven up underwriting
expenditure in auto insurance; in Spain, insurers have
been unable to raise rates, because weak economic
conditions have made customers more price-sensitive.

11. 2012 World Insurance report
Insurers in Most Markets Share a Focus
on Cost and Operational Efficiencies
With the decline in investment income, which once
provided a constant profit stream for the non-life
industry, insurers have been forced to concentrate
on improving the building blocks of underwriting
performance: claims, and operational and acquisition
ratios. In many markets, the economics of risk pricing
call for an increase in premium rates, but insurers face
such competitive pressure that they have refrained
from any significant rise in rates for fear of customer
defections. As a result, the non-life insurance industry
is looking to improve the process efficiencies in claims,
operations, and distribution functions to lower their
costs and enhance profitability.
In studying the non-life industries in thirteen
countries (presented here alphabetically), we looked
specifically at how insurers are performing with
respect to the different components of underwriting
performance. The study shows all non-life insurers
are focused on reducing operational costs and raising
effectiveness, but the options open to different players
depend very much on market conditions.
Australia
The Australian non-life industry is dominated by
large-scale players after a decade of consolidation
has resulted in there being just three major groups
(Suncorp, Insurance Australia Group, and QBE
Insurance Group). The three control more than twothirds of total GWP.
The claims ratio of Australia’s non-life insurers
improved during 2010 as claims payouts declined and
premium rates rose. Claims expenses had risen sharply
in 2009, due to claims related to various weather
events (including a higher-than-average number of
home losses in bushfires), and inadequate pricing of
compulsory third-party (CTP) motor insurance.
The performance of both personal and commercial
lines improved in 2010, and the decline in the claims
ratio for domestic lines was especially steep, as
premium rates for personal lines rose for a second
straight year: by 8% in 2010, after an 8% increase in
2009. Commercial-line coverage is more competitive,
so insurers have been slower to push those rates up.
Rates for commercial lines rose only 4% in 2009 and
fell 1% in 2010.
CHAPTER 1
Nevertheless, Australia’s non-life market is relatively
concentrated, compared to highly competitive markets
like the U.S. and Germany, so insurers are likely to
continue pushing up premiums to cover costs. Those
rate increases could help to cover claims-related costs,
and thus reduce the claims ratio, though 2011 has
already seen numerous adverse natural events that are
likely to increase claims payouts for the year.
Competition is also likely to increase in the Australian
market, including entry and expansion by foreign
players, so a price war could still ensue, making it
more difficult for incumbent insurers to use price
increases to cover costs. Still, insurers have also been
improving underwriting results by focusing on better
risk pricing, and improving reserve estimation for
adverse natural events.
The operational ratio of Australia’s non-life industry
has been stable over the last few years, and is lower
than many of the countries analyzed, because
most incumbents have successfully leveraged their
significant scale. Scale has also helped to keep the
acquisition ratio in check. The ratio improved in 2010,
declining by 0.9 percentage point to 13.1%, after
edging down 0.4 percentage point in 2009. However,
those improvements came after a significant jump in
2008, at the height of the financial crisis.
Belgium
The Belgian non-life insurance market has a higher
level of market penetration than some of the larger
markets in Europe, including France and the U.K.
The claims ratio for the Belgian non-life insurance
industry improved marginally in 2010, declining 1.0
percentage point to 64.0%, after a 2.5-percentagepoint increase in 2009, when the claims ratio had
increased across all lines of business. Despite the slight
improvement in 2010, the claims ratio could rise in
the future, potentially forcing insurers to increase
premium rates in coming years. The claims ratio for
auto coverage is under particular pressure, due to
intense industry competition, the increasing frequency
and severity of accidents, and the surging cost of
repairs and medical care.
The operational ratio for the non-life industry has also
risen in the last two years, after declining from 2006
to 2008. This has left insurers little choice but to invest
in operational efficiencies going forward.
11

12. The industry’s acquisition ratio also increased
marginally in 2010, as a rise in premium volumes
increased commissions paid. The acquisition ratio
in Belgium remains higher than in most European
countries, even though the industry continues to
explore alternative, lower-cost channels.
Direct distribution had been rising steadily
(accounting for 20.9% in 2007, up from 15.2%
in 1998), but has stagnated more recently, and
accounted for 20.1% in 2009. Bancassurance has
grown at a fast pace over the last decade, but still
accounted for just 6.9% of the non-life market in
2009, though that share is higher for personal lines
such as home insurance (18.2%). The expansion in
direct and alternative distribution is likely to continue
in coming years nevertheless.
Brazil
The Brazilian non-life insurance market remains the
largest in Latin America, and has witnessed one of the
fastest growth rates in the world in terms of non-life
GWP in last few years. However, market penetration
is still low compared to that in a few of the smaller
countries in the region. Brazil’s insurance regulators
continue to push the adoption of international best
practices, which should strengthen the system’s
controls and health, and provide insurers with a firmer
base from which to expand their operations.
The claims ratio of Brazil’s non-life industry
dropped 2.4 percentage points to 62.1% in 2010,
after a percentage-point drop in 2009, mainly due
to decreased claims expenditures in auto lines.
Auto insurance accounts for more than half of all
non-life premiums in Brazil, and insurers have
raised premium prices, by 14% across non-life, and
improved loss controls in the auto segment. Also, the
Brazilian reinsurance market has become increasingly
competitive since deregulation in April 2008, and
reinsurers are likely to push for improvements in the
underwriting and risk management capabilities of
non-life insurance players, which could help insurers
to reduce claims costs.
Notably, Brazil’s insurers have effectively managed
their claims expenditures, even in a high-growth
environment. Non-life premium volumes jumped
13.3% in 2010,5 and the robust rate of growth in
this emerging-market economy could drive further
business expansion in coming years. This is likely to
push insurers to increase infrastructure spending,
and perhaps increase scale through consolidation, to
capture efficiencies and ensure sustained profitability.
The industry’s operational ratio has increased in the
last two years, as insurers invested to expand their
business. Consolidation and scale efficiencies could
reduce that ratio in the future, although insurers will
need to continue spending to capture improvements.
The industry’s acquisition ratio dropped a little in
2010 as the economy helped to boost business, but
Brazil’s insurance products are still distributed mainly
through intermediaries, and direct-sales channels
have faced resistance. Convention and the legal system
heavily favor brokers, which are strongly unionized,
and politically influential. However, insurers have
developed a new low-cost alternative channel
leveraging widespread outlets, such as garages,
petrol stations, pharmacies, department stores,
supermarkets, and utility companies, and this has
helped them to reach the lower-income population at
low distribution cost.
Canada
Canada is one of the world’s top ten non-life
insurance markets in terms of GWP, but the market
is highly fragmented, populated by both global and
local players.
An elevated claims ratio continues to result in
underwriting losses for the Canadian non-life
insurance industry. Adverse weather conditions
have prevailed in the last three years, including
tornadoes and hailstorms in 2010. The claims ratio
dipped marginally to 73.8% in 2010 from 74.0%
in 2009, but the severe weather and water-damage
claims have helped to make personal-lines business
Based on non-life premium volume for 2009 and 2010 in local currency (Brazilian Real), and data from “World Insurance in 2010,”
Swiss Re Sigma Report, 2011
5
12

13. 2012 World Insurance report
unprofitable. The claims ratio has been especially high
in auto insurance, but Ontario reforms announced
in September 2010 could help drive cost savings by
providing insurers with more flexibility to customize
risk pricing and improve risk selection. Such actions
could reduce the claims ratio.
The industry’s operational ratio has largely held
steady in recent years, and local Canadian insurers
have tended to fare less well than large global players,
which have more scale to drive efficiency in key
elements of the business, including capital, research,
and advertising. Still, the non-life industry has
suffered an underwriting ratio of more than 100%
for three straight years, so most insurers will need to
make additional investments to improve operational
efficiency. Consolidation may also occur among
smaller players.
The acquisition ratio has also been high in Canadian
insurance, and increased 0.6 percentage point to
17.3% in 2010, as agent commissions grew with
the increase in premium volumes. The Internet is
gaining traction as a low-cost alternative, though,
and customers are keen to shop around for the best
prices. As a result, insurers with Internet offerings
could capture significant cost savings and potentially
increase market share going forward.
France
France is the third-largest non-life insurance market in
Europe, and the fifth largest in the world.
The claims ratio of the French non-life industry
improved in 2010, but has been high in last two years,
mainly due to natural catastrophes, most notably in
2010 from the impact of storm Xynthia and flooding
from storm Var, and in 2009 from the effects of storms
Klaus and Quinten. As a result, French non-life
players will need to leverage best practices in weatherrelated underwriting to control claims costs going
forward. Separately, motor insurance continues to
be underpriced due to the high level of competition,
CHAPTER 1
creating even more cost pressure for insurers
operating in that segment. Insurers exposed heavily
to small businesses have also seen disproportionately
high claims in their commercial lines, as small
and medium-sized enterprises have experienced
considerable volatility in earnings during the economic
slowdown in recent years.
The operational expense ratio of France’s non-life
industry was better than in most of the other analyzed
countries in 2010, largely because premium volumes
increased while non-life insurers continued to pursue
efficiencies. Large global non-life insurance players
tended to have better operational ratios than smaller
players, due to economies of scale. Also, a few of the
large French insurance firms had invested heavily
in process optimization before 2007, which has
translated into reduced operational ratios since 2007.
More recently, many major non-life players have
announced new cost-savings initiatives for 2011 and
2012, as they seek to offset underwriting losses. As a
result, the non-life industry’s operational ratio is likely
to improve further over the next few years in France.
The non-life acquisition ratio increased marginally in
2010, with agents and brokers still forming the major
distribution network in the French non-life market.
Nevertheless, insurers are keen to improve their cost
efficiencies, and are looking to reduce acquisition
ratios by developing low-cost channels, restructuring
traditional channels (and existing agent models), and
focusing on multi-channel strategies. Bancassurance
has expanded as an alternative channel, although the
growth has slowed in recent years, and many insurers
are now focused on the cost-saving potential of the
Internet as a channel.
In 2010, the industry’s profit margin improved
slightly, mainly due to an increase in investment
income and a decline in the underwriting ratio. Still,
commoditization in insurance products, and price
transparency and customer awareness in this mature
market, have prevented prices from keeping pace with
the increasing cost of claims in the past two years.
13

14. Germany
Germany is the second-largest non-life insurance
market in the world, and the largest in Europe. In
Germany, insurance is mandatory for everyone,
fueling the segment’s growth. Most of the major nonlife players are German, though a few pan-European
giants also have a tangible presence.
The claims ratio of German non-life insurers
deteriorated significantly in 2010, rising by 3.4
percentage points to 70.5%, mainly due to increased
motor and property claims after storm Xynthia early
in the year, and flooding from the Spree and Neisse
rivers in the summer. The claims ratio is expected to
improve in 2011, however, as the number of weatherrelated claims events appears to be lower than in 2010.
The operational ratio of the German non-life industry
rose marginally in 2010, after a similar rise in 2009
but a slight year-on-year decline in 2006-08. The
larger global non-life insurance players have had
lower operational ratios, as they have the scale to
shoulder the hefty capital, research, and advertising
expenses required for non-life. However, most insurers
operating in Germany are local and are smaller than
these global players, and they continued to suffer from
high operational ratios. As a result, the industry as a
whole is expected to make investments in efficiency
initiatives going forward.
The acquisition ratio of the German non-life insurance
industry has increased marginally over the past few
years, as the industry continued to distribute heavily
through intermediaries, such as agents and brokers.
Motor insurance is the largest single line of business,
and its main distribution channel is the agent network.
(Tied agents are in the majority, and account for more
than half of market share.) The role of bancassurance
remains limited in Germany, largely because the
prevalence of small and regional banks impedes
widespread distribution of standardized products
throughout the country. Going forward, the German
non-life insurance industry has an opportunity
to reduce the acquisition ratio by developing and
utilizing low-cost direct-sales channels.
14
Investment income for German non-life insurers
dipped slightly overall in 2010, but a new ordinance
on the Investment of Restricted Assets of Insurance
Undertaking (AnIV) took effect in July 2010, and
allows insurers to make new types of investments,
including certain closed-ended real-estate funds,
shareholder loans to real estate companies (which
could produce interest income), and commodities. This
new regulation could prompt German non-life insurers
to increase their investments in alternative vehicles,
such as real estate and private equity, potentially
changing the contribution of investment income.
The profit margin for the German non-life insurance
industry has seen significant erosion in the last couple
of years, and the decline in 2010 was fueled by a rise
in claims expenses, a drop in investment returns, and
the lack of any significant increase in prices due to
significant competitive pressure. If these dynamics
endure, it could lead to consolidation among German
insurers, especially as this highly developed market
offers little room for significant additional expansion.
India
India’s non-life insurance industry is in a nascent
stage compared to the other analyzed countries.
Insurance penetration is very low, except for
compulsory third-party motor insurance. However,
privately held insurers are increasingly looking to
penetrate health insurance.
The claims ratio of the Indian non-life industry
remained high in 2009 (the most recent year for which
results are available), even though no major covered
catastrophes have occurred since 2005, except for the
2008 Mumbai terror attack. The claims ratio is largely
driven by inefficient underwriting practices and
price competition, and claims have been especially
high in health and fire insurance. The claims ratio in
health insurance was 111.1% in 2009, showing that
GWPs remain far less than the claims and benefits
disbursed on that coverage, especially given escalating
medical costs. By contrast, the claims ratio for motor
and marine insurance has improved, and this has
especially helped public-sector (government-owned)
insurers, for which the claims ratio dropped to 88.3%
in 2009 from 91.3% in 2008. Private-sector insurers
are more efficient overall, however, and have a lower
claims ratio than the public-sector firms.

15. 2012 World Insurance report
The operational expense ratio of India’s non-life
industry has been high for the last four years, as new
and existing players invest in building capabilities
and/or scaling up their operations. These dynamics are
expected to last for some time, pushing up operating
expenses for the industry as a whole. In 2009, the
operating expenses of non-life insurance companies
were up 13.9% from 2008, and the industry’s
operating ratio rose 1.3 percentage points to 30.2%.
These ratios are likely to remain high as new private
and international players continue to enter Indian
insurance market.
The non-life industry’s acquisition ratio declined
slightly overall in 2009, but mostly because of the
private-sector players, which are increasingly looking
to tap cheaper distribution channels, such as the
Internet, and introduce exclusive products for these
alternative channels to reduce commission costs.
Public-sector players, by contrast, continue to have
large distribution forces, adding to their acquisition
expenses. Overall, the total commission expenses
for India’s non-life insurance industry rose by only
6.3% in 2009, despite a 14.0% increase in GWP,6 but
consistent losses on underwriting are likely to push
insurers to explore a variety of alternative channels,
including online distribution, bancassurance, and
non-banking financial companies (NBFCs).
Investment income rose significantly in 2009, largely
because equity markets rose. The Indian industry’s
investment ratio was the highest among the analyzed
countries due to equity exposure (though returns
remain below pre-crisis levels), and this helped to
compensate for poor underwriting results.
Italy
Italy is one of the largest non-life insurance
markets in Europe, but market penetration is low,
with individuals typically resorting to minimal
and compulsory coverage. There are a few large
international insurances companies, but most insurers
are Italian, and only a few of those players, such as
Generali, have a strong presence globally.
The claims ratio for Italy’s non-life insurance industry
improved significantly in 2010, dropping by 4.3
percentage points to 74.7%, helped by a decline in
car theft and auto accidents, as well as lower liability
CHAPTER 1
claims from injury cases. The ratio’s decline followed
a jump of 5.5 percentage points in 2009, which
was partly driven by reforms in auto insurance,
which accounts for more than 50% of non-life
premiums in Italy. The Bersani Law enacted in 2008
increased competition in auto-insurance pricing and
distribution, and a Milan court decision in 2009 on
bodily-injury claims required insurers to increase
reserves for such indemnities. Both initiatives have
further increased claims costs for non-life insurers.
Italian non-life insurers also continue to suffer from
higher-than-average fraud rates, especially in the
auto sector, where fraudulent claims are estimated to
represent nearly 10% of all claims, the highest rate
in Europe. The burden of fraud is expected to push
Italian non-life insurers to allocate more investments
to claims management systems so as to enhance frauddetection capabilities.
The investment in claims systems and other
technology might add to operational ratios in the
short-term, though the ratio for Italy’s non-life industry
has held fairly steady in recent years, and industry
consolidation has generally allowed players to capture
scale efficiencies and contain costs.
The industry’s acquisition ratio has also remained
stable, though it is relatively high compared with
other European markets, as distribution is dominated
by agents, which account for more than 80%
market share in non-life insurance. Going forward,
the industry will need to diversify its distribution
strategies, find ways to reduce the cost of commissions
being paid to agents, and develop alternative and
lower-cost channels. To date, for example, brokers and
direct sales contribute very little market share, and
bancassurance still accounts for less than 5%.
Profits have eroded in the Italian non-life insurance
market over the last three years, and have failed
to recover since the height of the global financial
crisis to the same degree as many other insurance
markets. Non-life players are now looking to diversify
and grow other products lines to improve their
profitability, as the dominant auto sector remains
under pressure, and the government is resisting
increases in auto premiums.
Based on non-life premium volume for 2009 and 2010 in local currency (Indian Rupees), and data from “Annual report 2009-10,” IRDA, 2011
6
15

16. Netherlands
The non-life insurance market in the Netherlands is
mature, and is one of the top ten largest in the world
in terms of GWP.
The claims ratio of the Dutch non-life industry
remains among the highest globally, mainly due
to the surge in health-insurance claims following
the introduction of compulsory coverage in 2006.
Since the 2006 mandate, health-insurance providers
have competed largely on premium rates, despite
being unfamiliar with risk pricing in the segment.
As insurers garner more experience of actual
consumption patterns and claims rates in health
coverage, they should be able to manage the claims
ratio more effectively, and improve price estimation.
Beyond health insurance, non-life players also had
to manage a substantial number of claims related to
severe weather in almost every season of 2010, and
this added to the industry’s aggregate claims ratio.
The industry’s operational ratio improved in 2010,
however, as non-life insurers moved proactively to cut
expenses and become more efficient in this highly
competitive market. The ratio dropped 3.3 percentage
points to just 6.1% in 2010, after falling 1.6 percentage
points in 2009 to 9.4%. Notably, the workforce of
the entire insurance sector shrank by 2.5% in 2010,
cutting salary costs significantly.
The Dutch industry’s acquisition ratio remained
stable, and relatively low, with competition heating up
from low-cost alternatives. Internet-only providers,
for example, are moving aggressively into non-life
products, primarily car insurance, which continues
to drive down premiums. The Internet is also proving
popular with customers, who like to compare products
and prices online, and are quick to switch providers.
These trends are especially challenging to the
position of established players, whose market share
is being attacked. Regulation is also adding to the
competitive pressure, with regulators halting the
practice of automatic policy renewals, and thereby
creating another opportunity for providers to vie for
the business of other firms.
Spain
Non-life insurance penetration in Spain remains low
compared to other major European markets such as
Germany, Italy, the Netherlands, Switzerland, and
the U.K., suggesting the market has greater growth
potential and further room for improvement than
those markets. Competition is significant in all
insurance lines of business, however, because while
there are a large number of insurers, the market is
concentrated. Fifteen companies, for instance, account
for 72% of all non-life GWPs. The pressure of market
competition, combined with the price-sensitivity of
customers and the capital requirements from Solvency
II, could drive further concentration in the Spanish
insurance industry, forcing some companies to merge.
The claims ratio of the Spanish non-life insurance
industry dropped 2.6 percentage points to 65.7% in
2010, but remains above 2007 levels. The operational
ratio has been stable since 2008 at around 8.2%,
and remains at the lower end of the range among
European peers. Spain’s non-life industry is mature
and competitive, so insurers have long had to focus on
growing their customer base while controlling costs.
In 2008, investments in efficiency initiatives caused a
jump in the operational ratio of 1.6 percentage points,
from 6.6% in 2007 to 8.2%, as those investments
occurred at a time when premium volumes were
growing only marginally. Given the stagnation in
premium volumes since, and the already low operating
ratio, new investment in efficiencies might be limited
in the coming few years.
Premium volumes have fallen in the last two years, by
3.5% in 2010 and by 2.2% in 2009,7 due to a decline
in industrial activity, a drop in vehicle sales, and a
shifting customer preference toward lower coverage.
(Health insurance premiums have been rising,
however, and volumes gained 5.5% in 2010.8) This
decline in premium volumes has created stiff price
competition, which is also intensifying due to the rise
of new low-cost direct insurance providers. However,
the first half of 2011 witnessed a small improvement
in the profit ratio, as the claims ratio edged lower
due to growth in premiums volumes in some lines
of business, such as health, and a decline in the
frequency of claims in auto insurance.
Based on non-life premium volume for 2009 and 2010 in local currency (Euro), and data from “The Spanish Insurance Market in 2010” and
“The Spanish Insurance Market in 2009,” INESE, 2010, 2011
7
Based on health insurance premium volume for 2009 and 2010 in local currency (Euro), and data from “The Spanish Insurance Market in 2010,”
INESE, 2011
8
16

17. 2012 World Insurance report
Still, insurers have been slow to raise premium rates,
and many have reduced premium prices, because
customers in Spain are very sensitive to price hikes.
At the same time, insurers have had to spend to attract
customers, putting upward pressure on acquisition
costs. That pressure has been compounded because
commission payouts per-policy to brokers and agents
have not declined as prices have dropped.
Brokers and agents together account for the majority
of non-life insurance premiums in Spain, although
the agent share has fallen steadily from 45.0% in
2001 to 39.5% in 2009, while the broker share has
grown from 23.0% to 26.5%. While agents and
brokers dominate, bancassurance has emerged as a
fast-growing distribution channel in Spain, as it has in
many European markets, and the non-life industry is
expected to see increasing competition from low-cost
direct insurers, which will put even more pressure
on insurers to reduce premium prices. The push into
bancassurance is being driven by the restructuring
of the Spanish financial system, the concentration
of savings banks, and the need for Tier 1 capital
requirements imposed by Basel III regulation. These
dynamics are causing financial institutions to focus
on the life segment, and sell their non-life insurance
businesses, while retaining joint ventures with
insurance companies to distribute non-life products.
However, bancassurance is not the only channel that
is growing. To be more competitive, insurers are
increasingly investing in new direct brands or entities
(e.g., telephone or Internet) for distribution and service
provision, especially in the auto-insurance segment.
The investment ratio of Spain’s insurance industry
grew in 2010, as compared to the financial crisis
period of 2008-2009. Nevertheless, this ratio will
remain linked to the performance of the stock
market (which has generally under-performed in
2011), and the resolution of the European debt crisis.
Spain’s insurance players have traditionally been
conservative in the allocation of their investment
portfolios, keeping a high proportion in fixed-income
securities, generally of good quality. Nevertheless,
with stock-market values generally in decline, the
DGSFP (Dirección General de Seguros y Fondos
de Pensiones) is considering softening regulation
to enable insurers to include in regulatory capital
calculations some assets with lower ratings (certain
assets with BB and B ratings).
In general, given prevailing market dynamics, Spain’s
insurers will have to focus on a combination of cost
reduction strategies (for long-term sustainability),
and growth strategies with limited investments.
CHAPTER 1
These investments could be allocated to product
innovation, or to expand product portfolios through
joint ventures/M&A, implement new channels (mainly
Internet and bancassurance), or explore opportunities
in emerging markets (mainly in Latin America). Such
moves could minimize insurers’ dependence on a
limited range of products, distribution channels and
geographies. This would require flexible platforms
(policy administration, claims and billing) to
complement business strategies.
Switzerland
Switzerland’s non-life insurance industry has one of
the highest penetration rates in the world, higher even
than in the U.K. or U.S.
The claims ratio improved slightly for Switzerland’s
non-life insurance industry in 2010, declining 0.5
percentage point to 69.0%. The claims ratio has held
fairly steady over the last five years, but 2010 saw
fewer covered claims from weather events, such as the
hail storms that had increased motor claims in 2009.
Also, in August 2010, the Swiss Federal Court revised
compensation for whiplash injuries, reducing the
claims for motor vehicle liability insurers.
Switzerland’s non-life insurance players continue
to derive substantial profitability from the core
business of underwriting. Recent improvements in
risk-underwriting measurement, for example, have
contributed to a decline in credit/surety claims. The
operational ratio of the non-life industry also improved
marginally in 2010, but has varied only slightly in
recent years, and operational efficiency has and will be
a critical focus for insurers.
The Swiss acquisition ratio decreased marginally
in 2010, after trending upward from 2006 to 2009,
amid increased competition in this already saturated
non-life market. Alternative distribution networks,
such as bancassurance and the Internet, have not been
significant in the Swiss non-life market to date, but
may offer cost-saving potential in future.
The Swiss insurance market operates in a very
tight regulatory framework, with stringent limits
on investment portfolio allocations creating a very
conservative investment approach. Indeed, over 40%
of non-life insurers’ investments are allocated to
fixed-income instruments, and exposure to equities
is minimal.
17

18. U.K.
The U.K. is the fourth-largest non-life insurance
market in the world, and the second-largest in
Europe. The non-life market is saturated, with most
households having some form of insurance.
The claims ratio of the U.K. non-life insurance
industry slid 7.4 percentage points to 66.2% in 2010,
largely due to increased premiums, and a decline in
adverse natural calamities. Personal-line premium
rates rose significantly, mainly in motor insurance,
which has suffered significant claims losses in the
past several years. Commercial premiums rose in
early-2010, but the rate of increase abated later in the
year, as insurers sought to protect potentially defecting
business. Overall, the claims ratio also benefited from
the absence of any major natural disasters or major
events like the floods of 2007 and 2008. As the U.K.
non-life sector continues to focus on improving its
underwriting ratio, premiums could continue to rise in
the medium-term.
The operational expense ratio of U.K. non-life
insurers remained at the high end of the range at
18.7% in 2010, but it is a similar ratio to that of the
U.S. Going forward, the increasing pressure from
operational expenses is likely to force U.K. insurers to
streamline operational and administrative processes,
and invest in long-term efficiencies in this highly
competitive market.
The changing distribution pattern for non-life
insurance products has helped to drive a decline in the
U.K. acquisition ratio over the last two years. Brokers
still account for the largest single share of insurance
sales (37% in 2009), but that share has been declining
over the last decade or so (from 52% in 1999). More
recently, the use of new and lower-cost alternatives has
been growing. For example, the share of sales through
banks and building societies was 13% in 2009, up
from just 5% a decade earlier. The Internet has also
emerged as a fast-growing medium of direct sales, and
the share of insurance products sold via the Internet
is certainly higher in the U.K. than in other European
countries. The use of non-broker alternatives is also
likely to increase further in coming years.
18
The profit margin for the U.K. industry increased in
2010, as insurers raised premiums despite the highly
competitive conditions. However, profit margins
remain well below 2006 levels, and U.K. non-life
insurers still need to cut their underwriting losses, and
look to make core business more profitable, in order to
thrive in the longer-term.
U.S.
The U.S. is the world’s largest non-life insurance
market. The majority of households has one or
more types of insurance, and the market is highly
competitive, with many specialty and general
insurance providers, which provide the bulk of
products. Motor insurance is mandatory, and accounts
for the largest single segment of non-life coverage.
The claims ratio for the U.S. non-life insurance
industry deteriorated from 67.7% in 2009 to 69.1%
in 2010, as hefty weather-related personal lines
claims and weakness in commercial line insurance
undermined underwriting performance. The
homeowners market, in particular, experienced
more claims, especially as inland losses increased
from winter storms, tornadoes, and hail storms.
Commercial lines of business were pressured by
a decline in premium rates, due to competitive
pressure, and the ongoing tendency for insureds
to opt for lower coverage amounts amid the weak
economic conditions.
The rate of decline in commercial rates slowed in
2010 and early-2011, however, and there was even a
slight increase in premium rates for some commercial
property and worker compensation products. The
auto-insurance business has also been affected by
the economic recession, and premium volumes fell
in 2010, due to a decline in new-vehicle sales, and
a preference for lower coverage amounts among
policyholders. Notably, though, the decline in claims
and claims-related expenses was proportionally less
than the decline in premium volumes, so the claims
ratio still rose.

19. 2012 World Insurance report
The operational expense ratio of U.S. non-life insurers
overall declined marginally in 2010 as premium
volumes increased. Large players also captured cost
efficiencies from economies of scale, and leveraged
prior investments in enhanced technologies. (The
operational ratios for small and medium-sized insurers
were higher, however.) U.S. non-life insurers are
expected to increase their IT investments further in
order to improve operational efficiency and reduce
costs, focusing in particular on claims-processing and
policy-administration technologies.
The acquisition ratio fell slightly for the U.S. non-life
insurance industry in 2010, as premium volumes
increased overall. However, this followed three years
(2007, 2008, 2009) in which the acquisition ratio had
increased, because premium volumes declined while
insurers spent on developing alternative distribution
channels. Moreover, the U.S. non-life acquisition ratio
is one of the highest in the world, because the market
is highly developed and competitive, so insurers invest
in a wide variety of distribution strategies to try and
capture and expand their market share. More recently,
though, insurers have increasingly invested in Internet
and mobile distribution channels to expand their
reach and deliver better and faster customer service.
These channels could ultimately result in reduced
acquisition costs.
CHAPTER 1
Conclusion
Many of the world’s non-life insurers have experienced
gains in profitability in the last two years, as
investment income recovered from the lows posted
at the height of the financial crisis in 2008. However,
the ongoing effects of the economic recession are
palpable, and remind insurers that they cannot rely on
investment income to shore up performance.
Rather, insurers need to focus on the key components
of underwriting performance, and must look for
ways to minimize their claims, acquisition, and other
operational costs, while growing their business.
Smaller players may need to consolidate to gain critical
mass and achieve enough scale to diversify, but all
insurers will need to dissect their businesses to decide
which initiatives will deliver advantage in whatever
competitive and operating environment they face.
Some progress was made in 2010, but the focus on
improving underwriting efficiency is likely to continue
in coming years, especially given ongoing economic
weakness across the globe in 2011, and particularly
in Europe, which may lead to further declines and
volatility in investment income. Core operational
functions, such as policy administration, offer one of
the few remaining areas in which transformation can
deliver both cost savings and customer benefits.
19

20. 20

21. 2012 World Insurance report
CHAPTER 2
Business Agility Survey Shows
Investment in Several Policy
Administration Sub-Functions
Is Paying Dividends
CHAPTER 2
Introduction
Business agility measures the speed with which insurers understand and respond to changes in
the external and internal operating environment to remain competitive. As such, business agility
is very important to insurers today, as they face continually evolving social, market, regulatory,
and technology trends. Among those trends are: fast-changing customer needs and buying
behaviors, driven by changes in demographics; market forces of consolidation, convergence,
and globalization; increased commoditization and competition; innovation and integration in
distribution patterns; more stringent regulations; and evolving technology.
The analysis of business agility for WIR 2012 focuses on performance in Policy Administration
and Underwriting, and shows the insurance industry has, on average, progressed farthest in
achieving agility in certain core policy administration (PA) back-office levers: Confirmation of
Coverage and Policy Issuance; Policy and Contract Maintenance; Billing and Premium Invoicing;
and Premium Reminders and Renewals. Agility is higher in these areas than in other PA subfunctions, and it is notable that these are areas in which insurers have been investing in recent
years to enhance cost efficiency and effectiveness.
The agility of insurers is now likely to improve noticeably in the near-to-medium term in other
areas, especially Rate-and-Quote capabilities, and Underwriting and Risk Analysis. This
is largely because there has been an increasing focus on offering online rate modification
capabilities to all channels, and greater use of advanced analytics tools to support the
underwriting process.
The degree of agility is also progressing steadily in Product Set-up and Compliance, due to
specific demands in those areas: Market competition and changing customer preferences
are driving insurers to increase their speed to market for products, and the global focus on
regulatory stringency is requiring all insurers to put rigorous processes in place to manage
changing requirements and standards.
Agility in PA and Underwriting is not consistent across insurers or regions, however. Of surveyed
insurers, larger firms tended to exhibit higher maturity on most agility levers than smaller ones,
especially on levers that are generally centralized and core to business. Medium and small
insurers typically scored higher on levers focused on business acquisition and retention than
on other levers. U.S. and European firms tended to be more agile than those in many emerging
Asia-Pacific and Latin American markets, largely due to their more extensive investments in,
and use of, advanced technologies and analytics.
21

22. PA and Underwriting Agility Hinges on
Eight Key Performance Levers
Capgemini’s Insurance Business Agility Maturity
Framework divides the insurance value chain into
four core insurance functions: Product Design;
Front Office; PA and Underwriting; and Claims.
The model further divides each of these insurance
functions into sub-functions called levers, and
identifies five maturity levels for agility in each lever
(see Figure 2.1 and methodology for more detail).
The 2012 WIR focuses on business agility in the
PA and Underwriting function of the insurance
value chain. In short, the greater the agility in
PA and Underwriting, the more efficient insurers
are likely to be in policy issuance and servicing,
and the more effective they can be in reducing
operational costs. (WIR 2011 was focused on
agility in the Front Office and Claims segments
of the insurance value chain.)
The following are the eight levers of agility in PA
and Underwriting, and some examples of the
maturity spectrum (see Figure 2.2 for more detail
on the five distinct levels of maturity):
1. Product Set-up. How flexible insurers are in
setting up or modifying products, and making
them available to marketing/sales. Maturity ranges
from manual set-up of new products/enhancements
(maturity Level 1) to integration with enterpriselevel analytics, documents, and content management
systems (Level 5).
2. Underwriting and Risk Analysis. The degree
to which insurers use underwriting tools, such
as automated workflow management and rules
engines, to help underwriters focus on their core
job of assessing risk and controlling the quality of
risks being underwritten. The most basic level of
agility relies on manual/semi-automated processing
of all submissions, while the most mature leverages
advanced analytics, such as predictive models, to
make underwriting decisions.
3. Rate and Quote. How able insurers are to provide
accurate rates, and quote to their customers in
real-time. Capabilities range from semi-automated
rates/quotes for simple to complex risks to advanced
analytics, including predictive models, for risk rating.
4. Confirmation of Coverage and Policy Issuance.
How efficiently insurers can deliver confirmation
of coverage and policy/contract documents to
Figure 2.1 Capgemini Insurance Business Agility Maturity Model’s Framework
Core Functions
Policy Administration
and Underwriting
Front Office
Regulatory
Responsiveness
Customer Needs
Management
Product
Set-up
Underwriting
and Risk
Analysis
Payout Options
First Notice of
Loss (FNOL)
Market / Competitive
Intelligence
AGILITY LEVERS
Product Design
Distribution Channel
Set-Up / Scale-Up
Rate and
Quote
Confirmation of
Coverage and
Policy Issuance
Fraud /
Litigation
Management
Claims
Performance
Analytics
Ease of Product
Design
Centralized DistributionRelated Support
Functions
Policy /
Contract
Maintenance
Billing and
Premium
Invoicing
Claims
Assignment
Reserves
Management
Use of Product Design /
Development Tools
Distribution Channel
Optimization
Premium
Reminders /
Renewals
Compliance
Loss
Assessment
Recovery
(Subrogation
and Salvage)
Time
Management
Shared
Services
Self-Service Processing
Capability
Claims
Personalization of
Services
Support Functions
Finance and Accounts
HR Functions
Legal
Focus Areas For WIR 2012
Source: Capgemini analysis, 2011
22
Infrastructure and
Support
Asset Management

23. 2012 World Insurance report
customers. The most basic approach involves
manual processing and issuance of confirmation
of coverage and policy/contract documents, while
the most agile insurers integrate confirmation
of coverage/issuance into external entities so as
to support the self-service needs of customers/
channels/partners.
5. Policy/Contract Maintenance. How swiftly
insurers can process policy-change requests, lapses,
and reinstatements, and endorsements (in-sequence
and out-of sequence). Capabilities again range from
piecemeal and manual to fully integrated.
6. Billing and Premium Invoicing. How efficiently
insurers process the billing and premiums
invoicing activity for new as well as renewal
business. The least agile insurers still use
traditional billing via ‘snail mail’ and do not
CHAPTER 2
integrate with policy generation, rollout, or
tracking mechanisms. The most agile use billing
and collection data for analytics and risk profiling.
7. Premium Reminders/Renewals. How
sophisticated and efficient insurers are in
processing premium reminders/renewals. Only the
most agile use automated and integrated systems.
8. Compliance. How quickly insurers can make the
required regulatory-driven changes, and comply
with any new regulations across the PA function.
The least agile undertake ad-hoc analysis of
regulatory directives for compliance, and manually
extract regulatory reports and compliance needs.
The most mature integrate compliance with
enterprise-level analytics systems to ensure
enterprise-level compliance even with systemic
frameworks such as Solvency II.
Figure 2.2 Five Levels of Maturity in Business Agility for Each Lever in the ‘Policy Administration and
Underwriting’ Function
LEVELS OF MATURITY
Level 2
Level 3
Level 4
Level 5
Manual set-up of new
products /
enhancements
Automated set-up for
new products /
enhancements for
simple to medium
complexity products
Automated set-up for
new products /
enhancements for
complex products with
business rules / process
automation
Reuse of templates and
editable forms for
design and rollout of
products /
enhancements
Integration with
enterprise-level analytics,
documents, and content
management system
Underwriting and
Risk Analysis
Semi-automated
processing of all
submissions
Automated underwriting
of all simple to medium
complexity submissions
Automated underwriting
of all submissions,
including highcomplexity submissions,
with exception
processing
Leveraging analytics for
underwriting decisions
Leveraging advanced
analytics, like predictive
models, for underwriting
decisions
Rate and Quote
Semi-automated rate
and quote for simple to
complex risks
Automated rate and
quote for major lines of
business
Access to rate and
quote capability for
external entities, like
channels / partners
On-line rate
modifications and
changes
Leveraging advanced
analytics, including
predictive models, for
rating
Confirmation of
Coverage and
Policy Issuance
Manual processing and
issuance of confirmation
of coverage and policy /
contract documents
Automated processing
and issuance of
confirmation of coverage
and policy / contract
documents
Issuance of confirmation
of coverage and policy /
contract documents in
electronic format,
including e-mail and web
Outsourcing the
confirmation of coverage
and policy / contract
issuance function
Integration with external
entities to support selfservice needs of
customers / channels /
partners
Policy / Contract
Maintenance
Manual processing of
policy / contract
servicing request
Automated processing
of non-financial policy /
contract servicing
request
Automated processing
of simple to medium
complexity financial
servicing requests
Outsourcing of policy /
contract servicing and
maintenance function
Integration with external
entities to support selfservice needs of
customers / channels /
partners
Billing and
Premium
Invoicing
Traditional billing with
snail mail capability, not
integrated with policy
generation and rollout;
and without tracking
mechanism
Automated billing with
limited payment options.
Billing and collections
integrated with policy
generation and
maintenance
Flexible billing with
multiple payment
options, integrated with
email and Internet
Account-level billing and
tracking, channelfocused billing to
support co-branding
and custom-made
insurance product
Use of billing and
collection data for
analytics and risk
profiling
Premium
Reminders /
Renewals
Manual processing of
premium reminders /
renewals
Automated renewal
notice / premium
reminder processing
Automated generation of
renewal notice /
premium reminders with
request for pending
information
Automatic renewals /
premium collections
with usage of policy
history data and support
for co-branding and
custom-made insurance
products
Integration with external
and internal systems, as
well as enterprise
analytics platform
Compliance
AGILITY LEVERS
Level 1
Product Set-up
Ad-hoc analysis of
regulatory directives for
compliance, manual
extract of regulatory
reports and compliance
needs
Dedicated compliance
team for analysis,
implementation, and
tracking of compliance
Enterprise-level
compliance team that
governs the compliance
norms across all
functions, including
policy administration
Robust archiving and
retrieval mechanism for
policy / contract /
endorsement records,
with audit trail
Integration with
enterprise-level analytics
system for enterpriselevel compliance
requirements, such as
Solvency II
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011
23

24. Proactive Investment Has Improved
Agility in Core Back-Office PA Levers
Many insurers have been proactive in upgrading core
back-office levers of PA systems, and the analysis shows
these investments are paying off in terms of agility.
This is especially the case in the areas of Confirmation
of Coverage and Policy Issuance, Policy/Contract
Maintenance, Billing and Premium Invoicing, and
Premium Reminders and Renewals (see Figure 2.3).
However, insurers’ agility in other PA levers is likely to
increase in the near-to-medium term, as insurers keep
investing in PA transformation initiatives to capture
potential gains in process effectiveness and cost
efficiency. For example, more insurers are developing
automated rate and quote capabilities, and intend to
offer online rate-modification capabilities to traditional
as well as non-traditional channels. As a result, their
maturity level on the Rate and Quote lever should
improve in the near-term. And with the increasing
trend toward leveraging advanced analytics to support
underwriting processes, insurers are also likely to
move up the maturity scale on the Underwriting and
Risk Analysis lever.
This type of progress is not equally evident across
all types of firms, however. Maturity levels heavily
depend, on aggregate, on the size of the firm in
terms of premiums written. For instance, large
insurers displayed relatively higher maturity on most
agility levers, driven largely by their ability to invest
more heavily in advanced IT systems and analytics
platforms. Larger firms were also far more mature
on levers that are usually centralized and core to
business, such as Underwriting and Risk Analysis,
Billing and Premium Invoicing, and Premium
Reminders/Renewals.
Medium and small firms, by contrast, displayed
relatively higher maturity on customer touch-point
levers, such as Rate and Quote, Confirmation of
Coverage and Policy Issuance and Policy/Contract
Maintenance, which all have a direct impact on
customer service levels.
Non-life firms displayed higher maturity levels as
compared to life firms on most levers, in particular
the Underwriting and Risk Analysis, Rate and Quote,
and Premium Reminder/Renewal levers. In fact, more
than 47% of surveyed non-life insurance firms said
they leveraged analytics for Underwriting and Risk
24
Analysis and Rate and Quote, compared with just
27% of life insurers. Also, 23% of non-life firms used
advanced analytics vs. 11% of life firms. Most large
and medium-sized non-life firms have PA systems
that are integrated in real-time with external and
internal systems, as well as with analytics platforms.
This contributed to non-life firms displaying higher
agility than life insurers on Confirmation of Coverage
and Policy Issuance, and Premium Reminder/
Renewal parameters.
Life firms were generally more agile, however,
in providing services around Policy/Contract
Maintenance and Billing and Premium invoicing
levers. Since life insurance policies are much longerterm contracts than non-life policies (which usually
expire in a year), life firms are generally more focused
on improving their agility around policy maintenance
and premium invoicing levers.
U.S. and European insurance firms displayed very
similar agility levels on most parameters, reflecting
their comparable approaches to, adoption of, and
expenditure on, advanced technology. European
insurers displayed higher maturity levels on the
Compliance category amid their drive to meet new
Solvency II norms. U.S. firms were relatively more agile
on Underwriting and Risk Analysis, and Billing and
Premium accounting levers, reflecting their widespread
use of analytics, including predictive modeling, to
support underwriting decisions, and the extensive use
of billing and collection data for business intelligence.
Insurers in many Asia-Pacific and Latin American
insurance markets were generally less mature on most
of these parameters, which is consistent with the stillemerging state of those markets.
Survey Shows Agility in Different
PA Sub-Levers Varied by Business Line,
Region, and Size
Product Set-Up
Non-life insurers were more likely to have achieved
higher agility levels in Product Set-up, mostly because
their products are less complex than life products,
such as annuities, universal life, and unit-linked
products. In fact, one in four non-life firms surveyed is
already integrating PA systems with other enterpriselevel systems (that is, they have achieved the highest
level of maturity in terms of agility on Product Set-up
parameters, see Figure 2.4).

25. 2012 World Insurance report
CHAPTER 2
Figure 2.3 Relative Maturity of Insurers on Levers of Policy Administration and Underwriting, 2011
5.0
5
4.0
4
3.4
3.3
3.7
3.6
3.4
4.0
3.8
4.0
3.8
3
3.0
3.0
3.0
3.0
2
2.0
1
Compliance
Product
Set-up
Underwriting and
Risk Analysis
Rate and
Quote
Policy /
Confirmation of
Contract
Coverage and
Maintenance Policy Issuance
Weighted Mean
Billing and
Premium
Invoicing
Premium
Reminders /
Renewals
Mode
Note: Weighted Mean of any given lever reflects the weighted average score of all firms interviewed, based on the premiums of each firm and country. The Mode is the
maturity level of the majority of insurers interviewed.
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
FIGURE 2.4. Breakdown of Insurers’ Business Agility Maturity Levels for Product Set-up, 2011
Figure 2.4 Breakdown of Insurers' Business Agility Maturity Level for Product Set-Up, 2011
41% 16%
25%
Life
32% 14%
18%
Non-life
32% 13%
19%
U.S.
20%
Europe
23%
Asia-Pacific and
Latin America
35% 15%
39% 16%
30% 12% 18%
36% 15%
40%
17%
Large
22%
26%
25%
12% 59%
17%
25%
68%
22%
22%
24%
68%
23%
23%
19%
27%
22%
19%
25%
21%
Medium
26%
20%
23%
Small
27%
17%
65%
15% 61%
23%
18%
70%
Level 1: Manual set-up of new products /
enhancements to existing products
Level 2: Automated set-up for new
products / enhancements for simple to
medium complexity products
Level 3: Automated set-up for new
products / enhancements for complex
products with business rules
Level 4: Reuse of product / process
design templates and editable policy /
endorsement forms
64%
16% 60%
Level 5: Integration of policy administration
system with other enterprise-level systems
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
25

26. Many life insurers are also making significant
progress, though, with more than 35% already at least
at Level 4, reusing product/process design templates
and editable policy/endorsement forms to enhance
efficiency and effectiveness. Further progress is
likely among life insurers, which continue to invest
in improving their PA systems, but the investment
component of life products, especially annuities,
market-linked, and endowment products, is most in
need of improved integration (especially with asset
management systems) to enable greater agility.
As more insurers move to higher maturity levels on
the Product Set-up lever, their speed to market for
products is likely to improve, as they make products
available to marketing/sales teams more quickly.
Underwriting and Risk Analysis
Overall, 83% of insurers have at least adopted
automated tools for simple-to-medium complexity
submissions in the underwriting process (i.e., they
are at Level 2 on the maturity scale). However, just
17% is at Level 5, leveraging advanced analytics, such
as predictive models, to support the underwriting
process/decisions.
Non-life insurers appear to be more mature on this
lever (23% are already at Level 5 and 24% at Level 4,
see Figure 2.5). One leading U.S. non-life insurer, for
example, uses automated underwriting tools that help
with workflow management, and rules engines and
underwriting workbenches to process even highly
complex submissions. This insurer is also leveraging
advanced analytics tools, including predictive
modeling, to support the underwriting process/
decisions for personal auto as well as commercial lines.
It is relatively difficult, by contrast, to automate the
underwriting of life insurance, because it often requires
substantial external data, for instance from the medical
clinics and pathology labs that do policy screening
tests. Analysis of complex medical and financial
information typically requires manual evaluation.
Many U.S. insurers surveyed are already quite mature
in terms of Underwriting and Risk Analysis, with
25% leveraging at least standard analytics to support
underwriting decisions (Level 4) and another 25%
using advanced analytics, such as predictive models
(Level 5). The maturity of European insurers is not
far behind, and this progress reflects the significant
investments in advanced technology, and greater use
of analytics in these markets. By contrast, analytics
are used by fewer insurers in the emerging markets of
26
Asia-Pacific and Latin America, but are more common
among the subsidiaries of large multinational insurers,
which seek to leverage their best practices globally.
As insurers generally move to ever higher levels
of agility in Underwriting and Risk Analysis, the
chance of adverse risk selection is likely to decline, as
underwriters will be able to spend more quality time
and focus more on their core job of risk assessment.
Rate and Quote
The majority of insurers (75% of non-life firms and
58% of life firms) have automated their Rate and
Quote functionality for most lines of business (that is
reached at least a Level 3 on the maturity scale, see
Figure 2.6). As such, these insurers have externalized
their Rate and Quote capabilities for traditional
distribution channels and customers, typically through
business process management (BPM) or business
process re-engineering (BRE), and many have done so
to non-traditional channels as well.
These capabilities are especially evident in the
personal lines of non-life business, where policies
are less complex than the tailored products in some
lines such as commercial insurance. Nevertheless, life
insurers also appear among the most mature on these
parameters, amid the increasing drive by all firms to
offer a range of self-service capabilities.
Only 18% of all surveyed insurers (but 23% of non-life
insurers) have reached the highest level of maturity,
leveraging advanced analytics, including predictive
modeling, to enhance their Rate and Quote capabilities.
For one major insurance company in Italy, this has
meant: extending automated rate and quote capabilities
to all external entities, including banks, points of
sale, and other channels and partners; allowing
online rate modifications and changes for simpleto-medium complexity risks; and, for car insurance,
using an advanced analytics tool based on multivariate
prediction to facilitate risk-profile evaluations.
Again, U.S. and Western European firms are most agile,
while Asia-Pacific and Latin America insurers are more
likely to depend on conventional rating approaches.
Higher levels of agility in this lever enhance the
ability of insurers to provide accurate real-time rates
and quotes to their customers, and the need for
online quotes and rate modifications will only grow
as more customers embrace the online channel. As a
result, more insurers are likely to invest in this area
in the near-to-medium term.

27. 2012 World Insurance report
CHAPTER 2
FIGURE 2.5. Breakdown of Insurers’ Business Agility Maturity Levels for Underwriting and Analysis, 2011
Figure 2.5 Breakdown of Insurers' Business Agility Maturity Level for Underwriting and Risk Risk Analysis, 2011
58%
21%
37%
33% 13%
20%
Life
Non-life
16%
Level 1: Semi-automated processing
of all submissions
16% 11% 42%
20%
24%
23%
67%
Level 2: Automated underwriting of all
simple to medium complexity submissions
38% 13%
42% 16%
59%
24%
U.S.
26%
Europe
35%
39% 13%
44% 16%
56%
25%
24%
Asia-Pacific and
Latin America
13%
25%
18%
24%
25%
24%
12%
63%
Level 3: Automated underwriting of all
submissions, including high complexity
submissions, with exception processing
16% 58%
41%
6%
26%
Large
28%
Medium
19%
22%
Small
21%
Level 4: Leveraging analytics to support
underwriting process / decisions
15% 8% 44%
32%
15%
24%
22%
17%
61%
Level 5: Leveraging advanced analytics,
such as predictive models
58%
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
FIGURE 2.6. Breakdown of Insurers’ Business Agility Maturity Levels for Rate Quote, 2011
Figure 2.6 Breakdown of Insurers' Business Agility Maturity Level for Rate and and Quote, 2011
42% 16%
26%
25% 7% 18%
Life
28%
Non-life
30%
Level 1: Semi-automated rate and quote
for simple to complex risks
19% 11% 58%
22%
23%
75%
Level 2: Automated rate and quote for
major lines of business
27% 11% 16%
31% 13% 18%
44% 13%
31%
31% 10% 21%
U.S.
25%
Europe
28%
Asia-Pacific and
Latin America
32%
23%
24%
25%
17%
73%
69%
Level 3: Automated rate and quote
capability extended to external entities,
e.g., channels / partners
16% 8% 56%
Large
27%
21%
21%
69%
36% 12%
24%
Medium
28%
20%
16% 64%
37% 13%
24%
Small
30%
18%
Level 4: On-line rate modifications
and changes
Level 5: Leveraging advanced analytics,
including predictive models, for rating
15% 63%
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
27

28. Confirmation of Coverage and Policy Issuance
Nearly two-thirds of all insurers have reached at
least a Level 3 on the maturity scale for Confirmation
of Coverage and Policy Issuance, and are using
electronic formats, including e-mail and the web, to
distribute binders and other contract documents.
That number is higher among non-life insurers (78%)
than among life insurers (68%), largely because
non-life insurers, especially personal lines insurers,
typically have more commoditized policies, and face
significant demand for self-service capabilities from
their agents and customers.
As insurers grow more mature in this area, they will
likely be able to better meet increasing demand for
self-service capabilities and potentially gain cost
efficiencies. Some insurers have captured these
benefits by outsourcing these activities (characteristic
of Level 4 maturity). Life firms are even more likely
than non-life firms to externalize these activities (see
Figure 2.7), because it is especially difficult for them to
achieve the requisite agility in-house, given the broad
range of external entities involved in the process, and
the complexity of policy documentation. Indeed, the
majority of life insurers that have outsourced these
activities report doing so to reduce costs and improve
customer service.
Still, more non-life firms (26%) than life firms (16%)
have reached the highest level of maturity, because
the demand from customers and agents for self-service
capabilities is greater in non-life, where policies tend to
be more commoditized.
One of the largest insurers in France, which offers
both life and non-life products, issues policy/contract
documents in electronic formats and via the web for
mass-market clients that request them, and it has
outsourced the Confirmation of Coverage and Policy
Issuance function for some of its run-off portfolios.
Moreover, the insurer’s PA system is integrated with
external entities to support the self-service needs of
customers and channel partners, primarily for nonlife and health lines of business, though self-service
support has also been extended to those with unitlinked contracts.
Large insurers are most likely to be at the highest
level of maturity, with many aggressively leveraging
straight-through processing (STP) and mobile
solutions to stay abreast of the competition in meeting
the increasing demand for self-service options. These
capabilities are also being hotly pursued, however, by
many medium-sized firms.
28
Policy/Contract Maintenance
The vast majority of insurers (79% of life insurers and
65% of non-life firms) have automated processing
capabilities for all financial and non-financial policy/
contract changes (that is, reached at least a Level 3 on
the maturity scale, see Figure 2.8). These capabilities
are especially evident among life insurers, because
financial change requests, including fund switches,
fund withdrawals, riders, and so on, are integral to life
coverage, and thus already supported through online
self-service modules by most life insurers. By contrast,
35% of non-life insurers still need to process financial
change requests manually, even though some have
automated non-financial change requests. Moreover
since life policies are longer-term contracts than nonlife policies, life firms seek to be more agile on the
policy maintenance function in order to support longterm customer relationships.
Insurers with higher levels of agility on this function
tend to be swifter in processing policy change
requests, resulting in superior customer service and
better retention levels. Outsourcing (Level 4 on the
maturity scale) is a viable option for improving agility
on this lever.
Of all insurers, 25% have reached the highest level of
maturity, where they integrate services with external
entities to support the self-service needs of customers
and channel partners. For one leading Spanish insurer,
this has meant providing policy/contract maintenance
services for various product lines through multiple
channels by integrating with third-party systems to
improve the customer experience. For example, the
company has developed web services to integrate
brokers’ systems, and created standard files to enable
the interchange of information between entities.
The insurer has also created an interface to integrate
information (including premiums earned) on the
various products and policies held by a single client.

29. 2012 World Insurance report
CHAPTER 2
FIGURE 2.7. Breakdown of Insurers’ Business Agility Maturity Levels for Confirmation of Coverage and
Figure 2.7 Breakdown of Insurers' Business Agility Maturity Level for Confirmation of Coverage and Policy Issuance, 2011
Policy Issuance, 2011
32% 16%
16%
22% 8% 14%
24% 9% 15%
23% 9% 14%
33% 14%
19%
Life
Non-life
U.S.
Europe
Asia-Pacific and
Latin America
19%
25%
20%
16%
30%
33%
16% 68%
27%
30%
26%
26%
38%
23%
Large
19%
28% 12% 16%
Medium
21%
31%
29% 11% 18%
Small
27%
25%
76%
23%
77%
14% 67%
34%
24% 12% 12%
78%
24%
77%
20%
72%
19%
71%
Level 1: Manual processing and issuance
of confirmation of coverage and policy /
contract documents
Level 2: Automated processing and
issuance of confirmation of coverage and
policy / contract documents
Level 3: Issuance of confirmation of
coverage and policy / contract documents in
electronic format, including e-mail and web
Level 4: Outsourcing the confirmation of
coverage and policy / contract issuance
function
Level 5: Integration with external entities
to support self-service needs of
customers / channels / partners
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
Figure 2.8 Breakdown of Insurers’ Business Agility Maturity Levels for Policy / Contract Maintenance, 2011
21% 8% 13%
35% 10%
25%
27% 9% 18%
24% 8% 16%
33% 13%
20%
Life
Non-life
U.S.
29%
25%
24%
18%
20%
Europe
28%
23%
Asia-Pacific and
Latin America
30%
17%
Large
24%
23%
29% 11% 18%
Medium
26%
20%
29% 10% 19%
Small
24% 8% 16%
30%
28%
22%
18%
22%
25%
29%
Level 1: Manual processing of policy /
contract servicing request
65%
29%
20%
79%
73%
76%
67%
76%
25%
71%
23%
71%
Level 2: Automated processing of
non-financial policy / contract
servicing request
Level 3: Automated processing of
simple to medium complexity financial
servicing request
Level 4: Outsourcing of policy / contract
servicing and maintenance function
Level 5: Integration with external entities
to support self-service needs of
customers / channels partners
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
29

30. Billing and Premium Invoicing
Nearly 80% of insurers are offering flexible billing
with multiple payment options to customers,
integrated with email and Internet options (i.e.,
they are at least at Level 3 on the maturity scale, see
Figure 2.9). Flexibility and convenience in payment
options are key to customer satisfaction, so insurers
are offering more online, self-service transactions, and
multiple payment options, especially in individual
and personal lines of business. The use of payment
gateways and electronic fund transfers has also
become the norm.
About one in four firms surveyed offer account-level
billing and tracking, and channel-focused billing to
support co-branding and customization of insurance
products (i.e., are at least at Level 4). This provides
critical support for corporate and affluent clients, and
high-performing channels, and facilitates the much
sought-after single view of the customer to the insurer.
Co-branding of products such as credit ‘shields’ with
term life, and disability with auto coverage, is evident
in many geographies, and bancassurance channels
offer one of the most effective means for co-branding.
Another 23% of firms overall are using billing and
collection data for analytics and risk profiling (they
are at Level 5), but large and medium-sized firms
are far more likely than smaller firms to do so.
Non-life insurers mostly use billing and collection
data to leverage advanced analytics for personal
and commercial lines for risk profiling, while life
insurers use such data to calculate key metrics, such
as customer lifetime value (LTV) and share of wallet.
Some, like one leading insurance company in Brazil,
also leverage these capabilities to build business
intelligence, and identify cross-sell/up-sell initiatives.
30
Premium Reminders/Renewals
Both life and non-life insurers continue to improve
their Premium Reminders/Renewal processes, amid
ongoing demand among customers for automation.
Already, 57% of non-life and life insurers surveyed
have at least automated policy reminders and renewals
with the use of historical data, and in a way that
can support co-branding (i.e., achieved Level 4, see
Figure 2.10). For example, some non-life insurers offer
automatic renewals for policyholders shown by their
claims history to be good risks.
Separately, 30% of all surveyed insurers already
integrate policy reminder and renewal activities
with external and other internal systems, including
enterprise analytics platforms (Level 5). Some life
insurers, for instance, are also leveraging automated
premium reminders as an opportunity to cross-sell
other products to certain customers, based on the
lifetime value of their business.
These capabilities can all help to boost customer
satisfaction and retention, which is critical for
driving growth in the currently depressed economic
environment, especially as tech-savvy customers
increasingly expect less manual handling of policy
processes.

31. 2012 World Insurance report
CHAPTER 2
FIGURE 2.9. Breakdown of Insurers’ Business Agility Maturity Levels for Billing Premium Invoicing, 2011
Figure 2.9 Breakdown of Insurers' Business Agility Maturity Level for Billing and and Premium Invoicing, 2011
20%
14%
6%
21%
14%
7%
Life
31%
24%
25%
80%
Non-life
30%
26%
23%
79%
U.S.
17% 13%
4%
Europe
19%
13%
6%
Asia-Pacific and
25% 10%15%
Latin America
17% 12%
5%
19%
13%
6%
24%
17%
7%
28%
28%
31%
26%
33%
22%
27%
83%
24%
Level 2: Automated billing with limited
payment options. Billing and collections
integrated with policy generation and
maintenance
81%
20%
75%
Large
29%
29%
25%
Medium
31%
26%
24%
Small
32%
25%
19%
Level 1: Traditional billing with snail mail
capability, not integrated with policy
generation and rollout
83%
81%
76%
Level 3: Flexible billing with multiple
payment options, integrated with email
and Internet
Level 4: Account level billing and tracking,
channel focused billing to support
co-branding
Level 5: Use of billing and collection data
for analytics and risk profiling
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
FIGURE 2.10. Breakdown of Insurers’ Business Agility Maturity Levels for Premium Reminders / Renewals,
Figure 2.10 Breakdown of Insurers' Business Agility Maturity Level for Premium Reminders / Renewals, 20112011
24% 9% 15%
17%
7%
10%
Life
24%
25%
Non-life
22%
29%
U.S.
20%
13%
7%
Europe
17%
11%
6%
Asia-Pacific and
27% 11% 16%
Latin America
15% 10%
5%
18%
12%
6%
30% 12% 18%
20%
28%
22%
29%
25%
25%
76%
27%
32%
32%
83%
80%
32%
23%
83%
73%
Large
20%
30%
35%
Medium
22%
28%
32%
Small
25%
22%
23%
85%
82%
70%
Level 1: Manual processing of premium
reminders / renewals
Level 2: Automated renewal notice /
premium reminder processing
Level 3: Automated generation of renewal
notice / premium reminders with request for
pending information
Level 4: Automatic renewal with usage of
policy history data and support for
co-branding
Level 5: Integration with external and
internal systems, as well as enterprise
analytics platform
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
31

32. CASE STUDY
Leading Non-Life Insurer Uses
Advanced Analytics to Drive Agility
in Rate and Quote and Premium
Reminders/Renewals
Genertel, the direct-insurance unit of Italy’s Generali Group, wrote about €300m in gross
premiums in 2010, mainly through direct channels (web, contact center), but also via commercial
partnerships. Nearly 90% of its GWPs came from auto insurance (much of it mandatory
coverage) in 2010. The capacity to attract customers who are good risks is a critical success
factor for profitability in Italy’s mature market, where claims ratios are high, but insurers cannot
easily raise premiums as customers are very price-sensitive.
To bolster its position, Genertel wanted to reward good drivers, and promote responsible driving
behaviors. The challenge was how to strengthen its reputation as an advocate and promoter of
responsible drivers, and improve the market image of mandatory coverage (perceived by endcustomers to be more of a tax than a service).
The insurer decided it first needed to improve its Rate-and-Quote agility so as to adapt pricing to
changes in customer behavior, and to the competitive context. It leveraged advanced analytics
(using constantly updating information on claims, risks, competitive pricing per segment, etc.)
to generate special offers and commercial discounts automatically for its high-value customers.
This improved the speed and flexibility of offerings for potentially more-profitable customers, and
optimized the distribution of discounts.
The insurer then introduced the Genertel Quality Driver® program to facilitate Premium
Reminders/Renewals for responsible drivers. The program hinged on data on three key metrics
of driving behavior collected from a GPS-based “black box” installed (free of charge) in the
customer’s car:
1) “Caution level,” based on the distance driven within speed limits;
2) “Risk level,” based on the types of roads driven at different times;
3) “Attention level,” based on the frequency and intensity of acceleration and braking.
Using the data, an algorithm automatically calculates and updates an individualized “Quality
Level” for the driver, and customers can access their score through a personal web/
Smartphone portal. At the end of their annual contract, a customer that has not caused any
claims accumulates “security-credits” that translate into a commercial discount for the renewal
(up to 25% of the previous year’s annual premium). The discount is calculated automatically by
the IT platform, and is proposed to the customer as a reward.
The “Quality Driver Pack,” which also includes additional GPS-based services (e.g., 24/7
assistance, location-finding capabilities in case there is a crash or theft), has helped to attract and
retain good customers, and bolster the firm’s reputation as an innovative and discerning provider.
32

33. 2012 World Insurance report
CHAPTER 2
compliance, and ensure management is well aware of
new regulations, especially in the life sector, where
regulation tends to be more complex. In many cases,
there is a Central Compliance Officer, who outlines
the strategy, and is responsible for overall reporting. A
Decentralized Compliance Office may be responsible
for business-line compliance.
Compliance
The increasing levels of regulatory oversight
worldwide have clearly prompted many insurers to
pursue, adopt, and implement robust compliance
mechanisms able to deal with regulatory changes that
affect the PA function either directly or indirectly.
About two-thirds of life and non-life firms already
have enterprise-wide governance of compliance
(reaching at least a Level 3 on the maturity scale), but
large insurers with a multinational presence are most
likely to have achieved the highest levels of maturity
(see Figure 2.11).
Conclusion
Our research shows insurers are already reaping cost
and efficiency benefits from prior investments in core
PA activities. Now, insurers will need to decide for
themselves the extent to which they must pursue ever
higher levels of agility in different PA sub-functions. In
general, more agile performers are more efficient and
effective, but the cost of improvement programs needs
to be weighed against the benefits. The net impact
will depend greatly on insurers’ strategic priorities,
their current and desired market and competitive
positioning, the needs and demands of customers,
agents, brokers, and other channel partners in their
business lines and markets, and the current and
potential state of the operating budget.
European insurers, especially larger ones, are the
most likely to be integrating enterprise analytics into
enterprise compliance (Level 5), as they have had to
manage their response to the EU’s Solvency II Directive.
Nevertheless, other geographies are faced with a host of
country, state, and local regulations, so compliance is in
sharp focus across the globe. This trend provides ample
scope for global sharing of best practices.
The most agile insurers on compliance report that
there is a strong drive from their headquarters
to provide regular training and ‘blind tests’ on
FIGURE 2.11. Breakdown of Insurers’ Business Agility Maturity Levels for Compliance, 2011
Figure 2.11 Breakdown of Insurers' Business Agility Maturity Level for Compliance, 2011
31% 15% 16%
33% 14%
32% 14%
19%
18%
25% 13% 12%
40%
18%
22%
23% 10% 13%
31% 14% 17%
42%
20%
22%
Life
27%
25%
17%
Non-life
28%
24%
15% 67%
U.S.
Europe
Asia-Pacific and
Latin America
27%
20%
31%
26%
29%
69%
15% 68%
26%
75%
22% 7% 60%
Large
25%
28%
Medium
27%
24%
Small
30%
22%
24%
18%
58%
6%
77%
69%
Level 1: Ad hoc analysis of regulatory
directives, manual extract of regulatory
reports and compliance needs
Level 2: Dedicated compliance team for
analysis, implementation, and tracking of
compliance
Level 3: Enterprise level compliance team
that governs the compliance norms across
all function
Level 4: Robust archiving and retrieval
mechanism for policy / contract /
endorsement records with audit trail
Level 5: Integration with enterprise-level
analytics system for enterprise-level
compliance requirements, such as Solvency II
Note: Each level of maturity is incremental in improvement over the preceding one
Source: Capgemini analysis, 2011; Executive interviews conducted for World Insurance Report 2012
33

34. 34

35. 2012 World Insurance report
CHAPTER 3
Policy Administration
Is the Next Priority
for Transformation
while Driving Results
CHAPTER 3
Introduction
Gross written premiums (GWPs) are starting to recover from the declines at the height of
the financial crisis, but growth is still weak overall, especially in industrialized markets. To
protect and grow profits in this environment, insurers are focusing on capturing efficiencies
through transformation initiatives. Policy administration (PA) is gaining attention as the next
transformation priority.
More specifically, insurers are looking at ways to transform IT-enabled PA, which underlies
the end-to-end management of insurance policies, from product set-up, underwriting and
risk analysis, and rate and quote decisions to confirmation of coverage and policy issuance,
and ongoing contract maintenance, billing and premium invoicing, and premium reminders/
renewals. Compliance is also a key aspect of PA in which IT can be effective, as existing
policies must be properly managed and amended to meet the latest regulatory standards.
In fact, IT-enabled PA can facilitate many interactions directly between insurers and
their customers, agents, brokers, and other third parties throughout the lifetime of these
relationships. As a result, while PA transformation affects the bottom line most directly, it can
also have a positive impact on the top line, because of the potential to improve satisfaction
levels among customers and other intermediaries.
Moreover, PA transformation can help insurers to manage many of today’s big market and
business challenges, including high costs, protracted product launches, regulatory-compliance
issues, and aging and inflexible IT systems.
35